College of Saint John Paul II Arts and Sciences

Mercedes Bldg., Junction, Ortigas Ave. Ext.,Cainta. Rizal

Tel: (02)8 655-2171 Email: www.csjpii.edu.ph

FUNDAMENTALS OF ACCOUNTING 1 & 2

PRELIM EXAM
1st Semester, Academic Year 2023-2024

General Instructions
1. Read and understand each statement carefully.
2. Write your answer on the test booklet.
3. Avoid unnecessary erasures.
4. Use black or blue pen only.
5.Use calculator or pen and paper for solving. Using a phone calculator is not ALLOWED.

I. DEFINITION. ( 15 pts) Define Accounting according to the American Institute of Public

Accountants.

Accounting is the art of documenting, categorizing, summarizing in a meaningful way and in terms
of money transactions and events that at least partially have a financial nature, as well as
analyzing the outcomes of these acts. The art of accounting. The language of business is this
one. The firm conveys to the many interested parties the outcomes of its activities and its financial
situation through the accounting data that has been created. In addition, when creating accounting
data reports, the accountant's judgment and estimation are required. However, accounting is a
science as well as an art since there are accounting principles that serve as a roadmap for
gathering data and creating reports.

II. IDENTIFICATION. (18 pts)

Identify the word or group of words being referred to by the following statements.

1. This is the technical term of recording. BOOKKEEPING

2. In this phase of Accounting, usually due to the technicality of accounting reports, the accountant
provides the analysis reports. INTERPRETING

3. In this phase, similar items are sorted or grouped under the same name. CLASSIFYING

4. Data recorded are compiled through financial statements in this phase of Accounting.
SUMMARIZING

5. The party who has direct interest business records. DIRECT USERS

6. Those who are indirectly interested in the accounting information of the business. INDIRECT
USERS

7.Direct user answers to the question, “What are the expenses which can be minimized?”.
MANAGEMENT

8. Direct user answers to the question, “Will my money grow in this business?”. PROSPECTIVE
INVESTORS

9. Direct user answers to the question, “Can the business meet its obligations?”. CREDITORS

10. Direct user answers to the question, “Is this firm reporting the correct amount of income?”.
GOVERNMENT

11.Direct user answers to the question, “Can we ask for more financial assistance/benefits?”.
EMPLOYEES

12. Direct user answers to the question, “Is it wise to make additional investment?”. OWNER

13.It is a professional service rendered by a Certified Public Accountant and is employees to the
public for a fee. PUBLIC ACCOUNTING

14. It is an accounting job done in private business enterprises. PRIVATE ACCOUNTING

15. Questions and many others can be answered and wise decisions can be made after thorough
study of these business reports. NEED FOR ACCOUNTING

16. Economic Resources owned and controlled by a business. ASSETS

17.Owner’s claims in the business. It is the residual interest in the assets of the enterprise after
deducting all its liabilities. EQUITY

18. Financial Obligations or Debts of a business arising from past events which are to be settled
in the future. LIABILITIES

III. Multiple Choice. (12 pts) Choose only the letter of the best / correct answer (BOLD LETTERS
ARE THE ANSWERS)
1. ____________ are classified according to ownership and nature of the business.

a. Transactions b. Accounting Elements c. Business Organizations d. Accounting reports

2. These are the economic activities of the firm where there is an exchange of value for value.

a. Private accounting b. Accounting equation c. Transactions d. Accounting

3. Why is Accounting considered as an art?

a. Because the human brain has its limits.
b. Because there are accounting principles that serve as a guide in accomplishing data in
accomplishing data and reports.
c. Because it is how the business communicates thru accounting/business reports and
considered as the “language of business”.
d. Because in every transaction, there is always a value received and value parted with.

4. Corporation is a type of business ownership that can be registered of how many persons?

a. Less than 3 persons b. Not less than 5 persons c. Exactly 4 persons d. None of the above

5. This involves purchase of raw materials and converting these raw materials into finished
products.

a. Service concern b. Trading concern c. Manufacturing concern d. Merchandising concern

6. This type of business is owned only by one person. Usually the owner is also the manager of
the business.

a. Partnership b. Single or sole proprietorship c. Corporation d. None of the above

7. This deals with the rendering of services to the customers.

a. Service concern b.Trading concern c. Manufacturing concern d. Merchandising concern

8. What are the 3 Accounting Elements?

a. Assets, Transactions, Liabilities b. Capital, Liabilities, Withdrawals
c. Assets, Liabilities, Capital/Equity/Owners Equity d. None of the above

9. Current Assets are those assets which can be reasonably converted into cash within a short
period of time, usually

a. within 1 year b. within 2 years c. within 5 years d. within a decade

10. What is the principle: Business as an accounting equity?

a. Owner’s income is joined with the business income.

b. Only the owner's liabilities are separated from the business liabilities.
c. Owners income and liabilities are separated from the business income and liabilities.
d. Owner’s income and liabilities are joined with the business income and liabilities.

11. Accounting is considered as a science in a way

a.Because the human brain has its limits.
b.Because it is how the business communicates thru accounting/business reports and considered
as the “language of business”.
c.Because in every transaction, there is always a value received and value parted with.
d.Because there are accounting principles that serve as a guide in accomplishing data in
accomplishing data and reports.
12. Why study Accounting? In order to appreciate and understand the financial reports of the
business, one should
a. Include the design, installation, and improvements of the financial data.
b. Finds himself employed in public or private accounting.
c. Have an understanding of how data is gathered and recorded.
d. None of the above.

IV. FILL IN THE BLANKS (20 pts) What are the values received and values parted with for each
transaction. Select the correct answer from the following values involved.

Cash Equipment Obligation to pay or Debt

T. Swift, Capital Right to occupy space Services
T. Swift, Drawing Cancellation of Receivable Furniture

TRANSACTIONS
1. Investment of money by the owner,T. Swift. T. Swift, Capital
2. Purchase computer sets on credit. Equipment
3. Bought store equipment on a cash basis. Equipment
4. Rendered printing services to a customer on credit. Services
5. Withdrawal of cash by the owner, T. Swift for personal use. T. Swift, Drawing
6. Paid the secretary’s salary for the month. Obligation to pay or Debt
7. Received payment from the client for the printing services. Cash
8. Paid the monthly rent of the office space. Right to occupy space
9. Sold some furniture no longer used in the business. Furniture
10. Paid the telephone bill for the month. Obligation to pay or Debt

V. COMPLETE ME! (6 pts)

Fill in the missing amount and provide the Accounting Equation that was use in each line.

ASSETS = LIABILITIES + EQUITY

850,000 = 200,500 + 649,500

500,000 = 175,000 + 325,000

300,000 = 80,000 + 220,000

1.What is the Accounting equation in set #1? ASSETS = LIABILITIES + EQUITY

2 .What is the Accounting equation in set #2? LIABILITIES = ASSETS - EQUITY
3. What is the Accounting equation in set #3? EQUITY = ASSETS - LIABILITY

VI. Word Problem (19 pts)

Fill in the missing items in each transaction provided. Put None and 0 if it's not affected.

1. On Sept 3, J. Bieber invested P1,000,000 for his music company. (3 pts)

DATE ASSETS = LIABILITIES + EQUITY
CASH J. BIERBER,
= 0 + CAPITAL
SEP 3 1,000,000 1,000,000
= 0 +

2. On Sept 8, the company purchased heavy duty equipment on credit amounting to P400,000.
(3 pts)
DATE ASSETS = LIABILITIES + EQUITY
SUPPLIES ACCOUNTS 0
= +
PAYABLE
 SEP 8 400,000 0
= 400,000 +

3. On Sept 25, J. Bieber withrew P15,000 from the business intended for his personal use. (3 pts)
DATE ASSETS = LIABILITIES + EQUITY
CASH J. BIERBER,
= 0 + DRAWINGS
SEP 25 15,000 15,000
= 0 +

4. Illustrate the summary of the above transactions made. (10 pts)

TRANSACTIONS DATE ASSETS = LIABILITIES + EQUITY
09/03 CASH 1,000,000 = 0 + CAPITA 1,000,0
CAPITAL L 00
ACCOUNTS 09/08 SUPPLI 400,000 = 400,000 + 0 0
PAYABLE ES
09/25 CASH 15,0000 = 0 + DRAWI 15,000
WITHDRAWAL NGS
Balance End
585,000 585,000

GOOD LUCK

Prepared by: Checked by:

Maria Fe L. Eribal, LPT Marissa O. Mepranum, D. Ed

Instructor/ Program Head, CBA School Director

Axel M. Neo
BSTM3Y1-3